Loyalty programmes are a fantastic marketing strategy. Brands all around the world are looking at ways to attract and retain customers in fiercely competitive markets. From points-based systems to partnerships between retailers and financial service providers, businesses use rewards to encourage repeat engagement and strengthen customer relationships.
Loyalty, however, is about more than incentivising another purchase. Understanding what motivates customers to participate, what influences their choices and how loyalty fits into a broader brand strategy is essential to creating genuine lasting relationships.
Byron Rode, Founder and CEO of (my)cards, shares his thoughts on this topic.
You built a product around the idea that people have too many loyalty cards. After working on the problem from the inside, what have you realised is broken about loyalty in South Africa — is it the programmes themselves or the way consumers are expected to interact with them?
I wouldn't put it down to one or the other. Some programmes offer good value and make it unnecessarily difficult to get. Others are easy enough to use, but the reward isn't particularly worthwhile. Those are different problems, and putting both into an app doesn't solve them.
I think we sometimes forget that the customer has already chosen to spend money with us. There should be some recognition of that.
If every benefit comes with another condition, another purchase or another thing to remember, you start to wonder who is doing whom a favour.
South Africans are quite willing to work for a good deal. You can see that in the participation research and in how people use different programmes together — but I wouldn't read that willingness as satisfaction with the experience. People can value the saving and still find the process frustrating. That's where I think retailers need to listen more carefully.
You’ve mentioned that consumers compare loyalty experiences not with other loyalty programmes, but with the best digital experience they have elsewhere. What does that mean for retailers whose loyalty experience still requires an app, a password, a card, a PIN or other steps at the till?
It means you don't get to decide what the customer considers easy. They have other experiences to compare yours with, and they aren't particularly interested in why your systems make something difficult.
From a product perspective, I'd look at how much the customer has to understand before they can use the service. We tend to become very familiar with our own rules and forget that somebody else is encountering them for the first time. Something that seems obvious to the team who built it can be completely confusing to the person trying to use it.
I'd also be careful about assuming that a better digital experience means adding more features. Sometimes it means removing a step, keeping someone signed in or letting them use the card they already have. A customer who can get on with their shopping has had a better experience, even if there is nothing particularly exciting to show in a product presentation.
Personalisation is typically presented as the holy grail of marketing, but there is a fine line between being relevant and being intrusive. From a technology and product perspective, how should brands navigate that line when using loyalty data?
There is a useful exchange possible here. If I understand how sharing some information will make the service better for me, I can decide whether that is worthwhile. The difficulty comes when the explanation is vague and the consequence is very obvious: suddenly I'm receiving far more marketing.
I think brands have to be specific about what they are asking for and what they will do with it. Joining a programme shouldn't be taken as an indication that someone wants every possible interaction you can build around their data.
Relevance also takes a bit of humility. A purchase gives you some information, but it doesn't explain a person's whole life or even why they bought that particular item. Better technology can help interpret patterns, but it can also make a wrong assumption at a much greater scale. Give people control, let them correct those assumptions and make it straightforward to stop the communication. That's part of providing a good service.
Loyalty programmes have traditionally been measured through metrics such as sign-ups and points earned. What do you think marketers should be measuring if they want to understand whether a loyalty programme is creating meaningful customer value?
I'd want to know whether customers are getting something worthwhile out of being members, and whether that gives them a reason to come back. A large membership number on its own doesn't answer either of those questions.
Redemption is a useful starting point, especially how long it takes to earn something usable and how often people actually use it. If rewards regularly expire, or customers need help to redeem them, I'd want to understand why before celebrating the number of points we've issued. I'd also ask customers directly whether they feel the programme is worth the effort. There are things a transaction report won't tell you.
For the business, repeat visits and retention matter, but you have to be honest about what caused them. Some members would have shopped with you anyway. The question is whether the programme improved that relationship enough to justify what it costs.
I think the measurement needs to hold both sides together: a benefit the customer values and a reason for the business to keep providing it.
You've described aggregation as only the first step towards a more connected loyalty experience. What does "connectivity" look like from a consumer's perspective and what needs to change behind the scenes for brands to deliver it?
I don't think consumers will describe it as connectivity. They'll notice that something which used to be a hassle now works. Their membership is recognised, they understand what is available to them, where it can be used and they can use it without having to work out which system holds the information.
The harder part is getting businesses to cooperate around that experience. Each brand has its own commercial reasons for running a programme, and those don't disappear because we can connect the technology. There needs to be agreement about what is shared, what the customer has permitted and who takes responsibility when something goes wrong.
That's why I see this developing through useful connections between existing programmes. A brand should still be able to offer something distinctive. With (my)cards, making existing cards easier to access is the starting point; the wider opportunity depends on partnerships that make the benefits easier to use as well.
The technology matters, but the relationship between the businesses has to work too.
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